The Treasury Department has informed Comerica that the Dallas company could lose a lucrative Direct Express government contract.
As the exclusive provider of the Direct Express prepaid card, the $71.8 billion-asset Comerica serves 4.5 million recipients and handles more than $3 billion of noninterest-bearing deposits.
Though a decision has not yet been made, Comerica said it received preliminary notification that it was rejected as the program’s financial agent. The five-year contract expires next year.
“At this time, we do not expect that Comerica Bank will retain the business long term,” Jim Herzog, the company’s chief financial officer, said during a conference call to discuss quarterly results. “The process remains fluid as contract negotiations are not yet final.”
Direct Express provided Comerica with $137 million in noninterest income last year – and $29 million in this year’s second quarter. Herzog, however, said that the income was largely offset by expenses tied to administering the program.